Financial adviser recommends taking Lane off HP board

CHARLESTON, W.Va. -- A financial advising firm to groups making investments in companies has recommended that Hewlett-Packard shareholders vote against keeping Ray Lane as chairman of the company's executive board.

Institutional Shareholder Services recommended Monday that shareholders vote against keeping Lane as HP board chairman, and against keeping two other directors -- John Hammergren, chairman of the finance and investment committee, and G. Kennedy Thompson, chairman of the audit committee -- on the board.

Lane, who graduated from West Virginia University and currently sits on WVU's Board of Governors, has been the focus of widespread criticism, especially since Hewlett-Packard spent $11 billion to buy Autonomy Corp., a British software company. HP ended up losing more than $8 billion from the deal.

Last Friday, Michael Pryce-Jones, senior researcher for the CtW Investment Group, talked about a Feb. 25 meeting he participated in with Lane, three other HP board members and about 20 of HP's leading investors.

"Targeting Lane would only further trouble the company," Pryce-Jones said during a telephone interview with the Gazette on Friday.

On Tuesday, though, the CtW Investment Group said it welcomed the recommendation from ISS.

"The ISS recommendation adds enormous weight to the case for removing long-tenured Hewlett-Packard directors and finish the Board renewal," said Dieter Waizenegger, who was recently appointed CtW's executive director.

"Despite having unanimously approved the Autonomy deal, the board continues to try to sweep the debacle under the rug by blaming the mess on a previous CEO it appointed. The board must hold itself accountable, especially those directors who most clearly failed investors," Waizenegger said on Tuesday.

HP will hold its annual shareholders meeting on March 20.

CtW is part of the labor coalition Change to Win, whose pension funds include about 7.8 million shares of HP stock, about 6.9 percent of the company's stock.

The ISS report released on Monday night stated a vote against Hammergen, Thompson and Lane is warranted for "failure to apply oversight of the due diligence process in connection with the Autonomy acquisition."

Since last year's shareholders' meeting, HP has announced about $17 billion in losses due to past acquisitions, including $8.8 billion from its acquisition of Autonomy in 2011, according to ISS.

ISS and the CtW Investment Group also want HP to terminate its contract with Ernst & Young, the company's current auditing firm.